Kenya and South Africa emerge as private equity safe zones amid U.S. trade disruptions

Business Insider

29-04-2025

Despite growing global uncertainty, a majority of private equity investors are doubling down on South Africa and Kenya as their top investment destinations over the next three years.
Majority of private equity investors are focusing on South Africa and Kenya for the next three years.
Global uncertainty and Trump's tariff policies are casting a shadow over Africa's fundraising prospects for 2025.
Investment on the continent dropped by 11% since the start of 2024, driven by global economic headwinds and high interest rates.
Despite growing global uncertainty, a majority of private equity investors are doubling down on South Africa and Kenya as their top investment destinations over the next three years, even as U.S. President Donald Trump's tariff policies cast a shadow over Africa's fundraising prospects for 2025.
According to the African Private Capital Association (APCA), more than 65% of general partners at private equity firms ranked South Africa and Kenya as their most attractive markets. Egypt and Nigeria followed, with around 50% of respondents highlighting them as key targets.
However, optimism is tempered by concerns and over one-third of investors expressed pessimism about raising capital this year, citing pressures from currency depreciation across African economies and the ripple effects of Trump's protectionist trade stance, Bloomberg reported.
Big deals dry up
Investment on the continent dropped by 11% since the start of 2024, extending a downward trend that began in 2023. The slowdown has been driven by global economic headwinds, persistent inflation and high interest rates, which have made investors more risk-averse. As a result, large-scale deals have become increasingly rare, with smaller, lower-risk transactions now dominating the landscape.
In the latest survey conducted by the London-based association, two key concerns still stood out. 'Exchange rate volatility on the continent' topped the list, cited by 84% of respondents. The second major concern, noted by 59% of investors, was the 'America-first investment approach,' which they fear could significantly affect foreign investment from U.S.-based firms.
Venture capital funding for African startups fell by 22% to $3.6 billion last year, according to a separate report by the African Private Capital Association released earlier this month.
The decline came as U.S. President Donald Trump's sweeping tariff measures rattled global markets, prompting investors to retreat from riskier assets. Earlier this month, Trump announced new tariffs of at least 10% on most imports into the U.S., targeting goods from about 60 countries, before pausing the duties for 90 days.
Despite the turbulence, the survey found that over the next three years, general partners (GPs) in Africa are prioritizing investments in energy, healthcare, and consumer goods. The shift reflects a growing alignment with global trends and evolving local market needs.